Question

Durrand Corporation's accumulated depreciation increased by $12,856, while patents decreased by $3,810 between consecutive balance sheet...

Durrand Corporation's accumulated depreciation increased by $12,856, while patents decreased by $3,810 between consecutive balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year. In addition, the income statement showed a gain of $4,156 from sale of land. Reconcile a net income of $41,378 to net cash flow from operating activities.

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Answer #1

Durrand Corporation Statement of Cash Flows (Partial) Cash Flows from Operating Activities: Explanation Depreciation expense and Amortization Expense: As depreciation and Amortization is a non-cash expenses, these items are have to be added back to the net income to arrive to the cash provided by the operating activities. Gain on Sale of land: As this is a transaction that represent the investing activity in a cash flow statement, it has to be deducted from the net income to arrive to the cash provided by the operating activities

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